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Wed 23rd Apr 2014 - Patisserie Valerie – there’s potential for 250+ more sites
Patisserie Valerie – there’s potential for 250+ more sites: Patisserie Holdings has reported that market research has shown potential for over 250 more Patisserie Valerie sites in the UK. The company, which is to seek an AIM flotation, stated: “The directors believe that the group has significant growth potential within the UK and plan to continue to grow the group’s store portfolio by pursuing a measured rollout strategy. Under the current ownership and management team, the group’s estate has grown from eight stores in 2006 to 138 stores to date, including 72 new store openings, excluding acquisitions. The directors believe that the processes and infrastructure within the group are all scalable and well supported by its hub and spoke operational model which enables the group to infill geographies where it is currently under-represented. The group has a cash generative new store model with typical capital expenditure and fit-out costing approximately £250,000 and with an average payback period of 23 months. Stores are typically profitable from the first month with average weekly sales of £14,000. The success of the concept in different locations and geographies underpins the rollout potential with 99 per cent of stores which have been open for more than 12 months profitable on a store contribution basis and over 60 per cent generating EBITDA in excess of £100,000 (in each case for the financial year ended 30 September 2013). The directors’ view of the group’s roll-out potential is supported by a recent independent location planning report which the company commissioned from Javelin. The study analysed the catchment areas and customer base of a number of existing Patisserie Valerie sites and assessed the potential of the Patisserie Valerie brand alone, to expand to other locations across the UK. The study concluded that there is the potential to more than double the existing store footprint in the UK, identifying over 250 potential new sites based on their ability to meet existing average payback criteria and achieve EBITDA generation consistent with already established stores. In addition to the sites identified by Javelin, the directors believe that further opportunities exist in retail parks, concessions, service stations, transport terminals and brasseries. The group opened 19 new stores in the financial year ended 30 September 2013 and has opened eight stores in the current financial year to date (excluding the Philpotts acquisition). The group has either agreed terms or is in negotiation with respect to a further 12 stores which are expected to be opened during the current financial year and which would bring the total number of new openings for the year ending 30 September 2014 to 20. Due to the rapid growth of the store portfolio the group is expected to benefit from the full year effect of sites opened within the last 12 months. This, combined with the ongoing integration of Philpotts, will provide a firm base from which to drive growth within the existing estate. The directors have identified a range of tangible future growth initiatives including broadening the group’s routes to market by developing the online delivery channel and investing in digital marketing. Costs will continue to be controlled as the group will look to take advantage of purchasing synergies and leveraging the existing production facilities. Since 31 March 2014, the group has traded in line with management expectations. The group has opened a further new store, under the Patisserie Valerie brand, in Shrewsbury. The group has also either agreed terms or is in negotiation with respect to a further 12 stores which are expected to be opened during the current financial year and which would bring the total number of new openings for the year ending 30 September 2014 to 20.”
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